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In a further sign that the pressures facing households have increased significantly, fresh figures showed that the cost of buying a first home has trebled over the past decade, forcing first-time buyers to pay hundreds of millions of pounds in stamp duty to the Treasury.

Experts said the Bank could cut its official rate as low as four per cent by the end of the year, as the true state of the economy becomes clear. Retailers have already warned that trading over Christmas was disappointingly low, as struggling consumers cut back on their present-buying.

The British Retail Consortium, which this week warned that it was the most difficult festive season on the high street in three years, said the need for a cut next month was "all the more pressing".

"The longer the Bank delays cutting rates again, the greater the risk of the economy heading in the wrong direction," said Kevin Hawkins, its director general.

Alan Clarke, an economist at the investment bank, BNP Paribas, said: "The MPC has gone back to dragging its feet. This was a missed opportunity in our view."

However, with inflation still above the Bank's Consumer Price Index target of two per cent, others argued that the decision was justified.

Ian McCafferty, the chief economic adviser at the business lobby group, the CBI, said: "Inflationary pressures from energy and food costs remain worrying.

"What probably tipped the balance in today's decision was the much greater calm in the money markets. This has allowed the Bank to take its time in assessing where the economy is going for next month's meeting."

The credit crunch in the City has made it more difficult for mortgage lenders to cut their interest rates and follow the Bank of England's lead.

The result is that homeowners are paying the highest rates in around seven years, as well as having to cope with rising living costs.

In a further sign of the challenges facing families, Government figures showed that the cost of a getting on to the property ladder jumped from just £58,391 for the average first home in 1997 to £173,134 last year.